Welcome to Glaukos Corporation third quarter 2018 financial results conference call. A copy of the company's press release, issued after the market closed today, is available at www.glaukos.com. All lines have been placed on mute to prevent any background noise. After the speakers remark, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press the pound key. This call is being recorded and an archived replay will be available online in the investor relations section at www.glaukos.com. I will now turn the call over to Chris Lewis, Director of Investor Relations and Corporate Strategy and Development.
Thank you. Hello, everyone. Joining me today are Glaukos President and CEO, Tom Burns, CFO, Joe Gilliam, and COO, Chris Calcaterra. Following our prepared remarks, we will open the call to questions. To ensure ample time and opportunity to address everyone's questions, we request that you limit yourself to one question and one follow-up. If you still have additional questions, you may get back into the queue. Please note that all statements other than statements of historical facts made on this call that address activities, events, or developments we expect, believe, or anticipate will or may occur in the future are forward-looking statements. These include statements about our plans, objectives, strategies, and prospects regarding, among other things, our products, our pipeline technologies, our U.S. and international commercialization efforts, the efficacy of our current and future products, and our competitive market position, financial condition, and results of operations.
These statements are based on current expectations about future events affecting us and are subject to risks, uncertainties, and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Therefore, they may cause our actual results to differ materially from those expressed or implied by forward-looking statements. Review today's press release and our recent SEC filings for more information about these risk factors. You will find these documents in the investor section of our website at www.glaukos.com. With that, I will turn the call over to our President and CEO, Tom Burns.
Well, good afternoon. Thank you for joining us. Today, Glaukos reported another strong quarter with third quarter net sales of $43.9 million, up 9% versus the year ago quarter and up 2% sequentially. Given performance that has exceeded our expectations through the first three quarters of this year, we are raising our 2018 net sales guidance range to $175 million-$177 million versus our previous range of $162 million-$166 million. Joe will discuss our financial results and outlook in more detail later in this call. In addition to delivering another record of quarterly revenues in the third quarter, we also commenced the U.S. commercial launch of the iStent inject, our next generation trabecular micro-bypass device.
As we sit here today, I could not be more pleased with the execution of our rollout strategies and the initial response of surgeons to iStent inject, leaving me more enthusiastic than ever about the product's prospects and what it means for Glaukos going forward. We've long believed that iStent inject, with its elegant and facile implant procedure, would be a compelling new treatment option for U.S. ophthalmic surgeons and patients, given its stellar clinical safety and efficacy results, predictable performance, and based on our experience in international markets where over 40,000 iStent injects have already been implanted. Two months into the U.S. iStent inject launch, these high expectations are being realized as we receive feedback from surgeons who have begun using iStent inject and reporting their initial results. Surgeons consistently highlight the straightforward nature of the implant procedure, providing them with confidence and predictability of stent placement.
They've also noticed an increased likelihood for greater IOP reductions, with promising early results given the two patent bypass openings through the trabecular meshwork, which are designed to create multi-directional flow through Schlemm's canal. This positive response was on full display at the recent American Academy of Ophthalmology annual meeting, where our technologies were featured in multiple surgeon presentations. In addition to showcasing a robust iStent inject marketing campaign at the show, we held a widely attended major MIGS educational symposia for active and potential iStent and iStent inject implanters titled Introducing iStent inject: MIGS Transformed, that featured an informative panel discussion with prominent key opinion leaders. Overall, we believe U.S. surgeons' experience to date validates what we've already seen in clinical literature and numerous international markets where the product has been commercially available.
Namely, iStent inject's ability to achieve sustained IOP reductions that appear to be equivalent or better than U.S. pivotal trial results through a minimally invasive, elegant, tissue-sparing procedure. From an operational perspective, the inject launch is following the same blueprint that proved successful with the original iStent, a controlled, methodical, tactical launch anchored by superlative sales rep training and skills transfer to the surgeon to achieve optimal procedural proficiency and patient safety. As we've always said, good outcomes translate into good long-term utilization. We successfully completed the full training of our sales force in August and commenced full commercial launch activities in September.
Our initial focus has been on converting our existing installed base of trained U.S. iStent surgeons, and I'm happy to say we're tracking in line with our internal conversion expectations. Our near-term primary commercial focus will continue to be on this conversion progression well into 2019, with a gradual shift of our reps back to training new surgeons who have yet to adopt MIGS, along with increasing utilization within existing accounts. As a reminder, iStent inject is based on the same fluidic method of action as our first-generation iStent, which over the last 10 years has been implanted in more than 400,000 eyes worldwide since its introduction and has earned an outstanding reputation of demonstrated efficacy and safety. Early surgeon feedback and initial iStent inject clinical and physician study results indicate the product and procedure comes with a superlative safety profile synonymous with our first-generation iStent.
Since our founding, we have focused first and foremost on safety. The strategy was and is to deliver MIGS technologies that offer the most favorable benefit to risk calculus for the surgeon and the patient, depending upon their stage of glaucoma severity. Safety has been the foundational driver behind not only the fundamental design and size of our products, but also the clinical and commercial cadence of our initial flow products and pipeline. The significant body of clinical and real-world experience with iStent and iStent inject represents a highly favorable device safety profile. iStent inject represents the first in a cadence and a cascade of anticipated new product introductions over the next five years. To that end, we continue to make great strides in advancing our pipeline of microscale surgical devices and sustained pharmaceutical systems for both combo cataract and standalone procedures.
We believe these pipeline platforms, if approved, will significantly expand our market opportunity at a solid cadence and uniquely transform Glaukos into the hybrid pharmaceutical device company that is well positioned for growth and leadership well into this next decade. As we discussed on our last quarterly call, we have commenced the concurrent phase III studies for iDose TR, and patient enrollment continues to proceed in line with our expectations to support our FDA approval target of late 2021-2022. If ultimately FDA approved, we believe the iDose TR will not only be instrumental in addressing the challenges of patient non-compliance with topical glaucoma medications, but also pave the way for a new treatment algorithm where surgeons use iDose alone or in combination with other therapies, including our portfolio of surgical flow devices, to more effectively manage patients' IOP.
Further, we believe the powerful iDose TR data available thus far underscores the potential of our iDose drug delivery platform to produce future generations of sustained therapies for glaucoma and potentially other ocular diseases. While we actively recruit our iDose pivotal trials and await the associated recommencement of our iStent SA pivotal trial, we're happy to announce we have commenced patient enrollment for our 510(k) pivotal trial for the iStent infinite, our three-stent standalone product for advanced and refractory glaucoma patients, well ahead of our initial timing expectation by year-end. As a reminder, this will be a prospective multi-center single-arm clinical trial that will enroll roughly 65 refractory subjects. We continue to target FDA approval for iStent infinite in the late 2020-2021 time period.
Finally, the two-year patient follow-up in the pivotal trial for iStent Supra, our suprachoroidal stent, will be completed in the first quarter of 2019, and we continue to target FDA approval in 2020. As we've said all along, we continue to see the suprachoroidal space as a potential second-line niche treatment option for more moderate to progressive open-angle glaucoma patients, given its higher risk to benefit profile versus the trabecular meshwork. We look forward to closely working with the FDA for this product once the pivotal data becomes fully available next year. As a result of the notable progress we're making on all fronts of our business, as we turn the corner towards 2019, we are accelerating key investments we're making for the future. These investments span across all major facets of our business, including in R&D.
With the success we've seen in the advancement of our flow and pharmaceutical platforms, we continue to add highly talented scientists, chemists, and engineers to form a powerful team equipped with state-of-the-art equipment to pursue early-stage product development, novel sustained pharmaceutical systems, and platform optimization. In clinical and regulatory, we're optimizing our worldwide leadership and organizational structure and adding resources internally that expand our capabilities and presence in the field to support global clinical study requirements, targeted regulatory approvals, and post-approval studies. We're moving forward investment to enhance and upgrade our global systems capabilities and to broaden our technology infrastructure to support this future growth. Finally, in our commercial organization, we continue to invest and expand our sales force, marketing, and market access teams, both in the U.S. and abroad.
As you know, the expansion of our direct sales presence in key international markets has been an important recent investment focus for us. In addition to the 16 international countries where we have a direct market presence today and continue to add resources, we are evaluating and making initial investments in potential new international markets where we hope to enter in the coming years. The investments to date are being validated as the momentum continued to build internationally during the third quarter, with all O.U.S. sales growth of 57% year-over-year. Our growth continued to be broad-based globally, with Australia, Germany, Japan, and U.K. leading the way. In Australia, the permanent reimbursement code covering the implantation of iStent and iStent inject in combination with cataract surgery became effective on November 1st.
While we've been impressed with our team's abilities to sustain growth in this region, despite not having any professional fee reimbursement, we are pleased to have secured appropriate economics for implanting physicians in Australia. Combined, we believe the investments we're making today will help to fuel our continued growth and solidify the foundation from which our franchise can significantly expand over time as we advance our aspirational mission to transform glaucoma therapy. With that, I'll turn the call over to Joe for a summary of the third quarter financial results. Joe.
Thank you, Tom. As noted earlier, net sales for the third quarter of 2018 were $43.9 million, a year-over-year increase of 9%. The U.S. represented 83% of our sales in the quarter and international 17%. In the U.S., third quarter 2018 sales were $36.4 million, up 2% from the same period a year ago. U.S. sales in the quarter were impacted by channel de-stocking ahead of customer conversions from iStent to iStent inject, as expected, which was partially offset by the competitive market developments late in the quarter. ASPs remained stable year-over-year and versus prior quarters. Outside the U.S., third quarter sales were $7.5 million, an increase of 57% from the same period a year ago. Our international business continued to outperform expectations as core market growth more than offset EU summer seasonality headwinds.
This quarter, Australia, Germany, Japan, and the U.K. drove the majority of the year-over-year increase led by growing iStent inject sales. Our gross margin in the third quarter was roughly 86.3% versus 85.9% in the same quarter in 2017. We continue to expect our gross margins to remain in the mid-80s% range going forward as we navigate the U.S. inject launch from an operations perspective. SG&A expenses in the third quarter rose 31% to $31.6 million, versus $24.1 million in the year ago quarter. This rise reflects higher personnel and other costs related to the ongoing expansion of our domestic and global infrastructure, primarily in our commercial and international operations and investments associated with the iStent inject launch. R&D expenses rose 45% in the third quarter to $13.2 million, versus $9.8 million in the same year ago period.
This rise reflects primarily the cost of additional personnel as we expand our pharmaceutical R&D capabilities and within clinical affairs, where, in particular, the direct costs associated with the iDose trial enrollment continues to increase. We finished the third quarter with a net loss of $6.6 million or $0.19 per diluted share, compared to net income of $1.3 million or $0.04 per diluted share in the third quarter of 2017. As of September 30th, 2018, we had cash equivalents, and short-term investments of $137.8 million, compared to $120.1 million at the end of the second quarter 2018.
As we said before, consistent with Tom's remarks regarding the investments we are making, it's important to remind you that as we progress through 2018 and into 2019, our primary focus remains on long-term growth as we prudently invest to build the MIGS market, drive increased penetration of our iStent and inject platforms globally, drive our robust pipeline initiatives through necessary clinical studies and programs, advance new opportunities into clinical studies. Finally, as Tom indicated earlier, we are raising our 2018 net sales guidance to $175 million-$177 million, up from our previous range of $162 million-$166 million.
This guidance outlook takes into account our continued organic outperformance, the updated MIGS market landscape, the new doctor training and destocking dynamics associated with our inject launch, and the expansion of our international sales, which we now expect to be at least $28 million for the full year, up from our previous range of $25 million-$27 million. With that, I'll now turn the call back to Tom.
All right. Thanks, Joe. To recap, Glaukos delivered strong financial performance in the third quarter with record revenues while achieving a major commercial milestone with the commencement of the U.S. commercial launch of iStent inject. I'm very pleased with the initial rollout of iStent inject and with the early surgeon feedback that reinforces our confidence in the product's potential to drive MIGS closer to becoming a standard of glaucoma care. As I think about the future of our business, I remain convinced that the substantial investments we're making today to deliver our pipeline and to expand our franchise can fuel sustained growth for many years to come. I want to thank the more than 400 Glaukos employees who dedicate their talents, determination, and energy to advancing our aspirational mission to transform glaucoma therapy.
I am very optimistic about the franchise we're building, and I believe in the proven ability of our team to continue to create meaningful shareholder value. With that, I'll open the call to questions. Operator.
At this time, I would like to remind everyone, in order to ask a question, please press star followed by the number 1 on your telephone keypad. Your first question comes from the line of Larry Biegelsen with Wells Fargo. Your line is open. Please go ahead.
Hi, guys. It's Adam Maeder for Larry. Thanks for taking the questions. I wanted to start with a question on next year. As we start looking ahead to 2019, there are a handful of moving parts. I think the expectation is for about 20% U.S. market growth in 2018. Should we be thinking about a similar rate of growth next year with a full year of Inject and no CyPass in the market? Would you expect to largely capture all the available CyPass share next year? Then just any thoughts on trialing in 2019 for Ivantis? Then I had a follow-up.
Hey Adam, it's Joe. I might take that a little bit in reverse. I think we've been on record with respect to CyPass share recapture, that it's not going to be a one-to-one correlation.
I think the marketplace is still evolving as we move forward here, but I think we remain of that view that we expressed in the early days post the recall. As we turn the corner to 2019, we're obviously not going to give guidance here today, but I think I can provide a little incremental color that will hopefully be helpful as folks think about the trends heading into 2019. We do feel good about the underlying market growth dynamics heading into the year, as Tom indicated in his remarks. From a doctor conversion to inject standpoint, we would expect to end the year with approximately half or at least half of our doctors in the training funnel. That's ahead of our original expectations as we enter the launch period. What does that translate into the dynamics that we've discussed on prior calls?
It means that, one, the conversion of doctors to iStent inject will continue well into 2019. Two, it means that the sales force will gradually return their focus to new doctor and same-store sales expansion over the course of 2019. Three, it means the channel destocking should largely subside from a macro standpoint as we enter the year. Lastly, finally, we would expect that the lack of new doctor training in the second half of 2018 would have a lag effect in the first half of 2019. Hopefully that gives you some color around how we're thinking about the setup going into the year, both from a market perspective as well as a Glaukos specific perspective.
That's helpful. Thanks. Just for my follow-up, I was hoping you guys could level set us on the current status of reimbursement. It looks like the calendar year 2019 facility fee is favorable once again. On the physician side, Novitas recently lowered the physician reimbursement for 0191T, I think to around $370 or so. How many of the MACs are now in this $300, $400 range? Then you're also seeking incremental reimbursement for inject with 0376T. How many of the MACs are providing additional reimbursement for this code? Just any comments around the impact that you've seen to same store sales growth following these cuts to physician reimbursement in the past. Thanks for taking the questions.
Okay. Hey Adam, this is Chris. Let's start out with the regs that came out for next year. We were quite pleased with those. For the ASC setting, it's about $114 incremental payment over 2018. In the hospital HOPD, it's about another $30, I believe. These are incremental, and that's a very positive thing. As it relates to Novitas, they did reduce their professional fee down into that $370 range, which is in line with what we've been communicating to everyone, that we felt that it needed to be between that $300 and $500 range. There's only one MAC that has not reduced their fee, and that's First Coast in Florida. They're at the $800 range. As we've guided you guys in the past, we would expect at some point for them to do the same.
We still feel that within that band, that $300-$500 range, there's plenty of incremental dollars for a physician to be adequately reimbursed for implanting iStent or iStent inject. As it relates to 0376T, this is an add-on code. This is a code that we're encouraging people to utilize when they implant iStent inject. This would be above and beyond what they would get for implanting an iStent, in this case, a second iStent inject. We have one MAC that is covering it and others that have been sporadic in their coverage of it. We're hopeful that this will be something that all the MACs will adopt. We still think if that doesn't happen, that there's enough here to have a favorable pro fee response for implementation of iStent inject.
Great. Thank you very much.
Your next question comes from the line of Brian Weinstein with William Blair. Your line is open. Please go ahead.
Hey, guys. Thanks for taking the question.
Go ahead.
Can we talk about market growth expectations here? I think it was alluded to just before, you guys have consistently commented on 20%. Is that still what you're seeing? Did you see any slowdown, or have you even seen any slowdown? Do you anticipate seeing a slowdown as a result of the safety concerns with CyPass into the market? We'll start with that. Then I have a follow-up. Thanks.
Hey, Brian. It's Joe. First and foremost, the 20% target that we expressed on the guidance call for 2018 was a full year target. I think we were pretty consistent on the subsequent calls of saying what we really expected was that to be somewhat front-end loaded and to be disrupted by our own activities in the second half of the year, specifically around the iStent inject conversion. I think that's exactly how it's played out over the course of the year. In the first half, we saw market growth that exceeded 20% from an organic perspective. As we got into the third quarter, I think we saw growth that was a little bit below 20%. Again, not surprisingly given that new doctor growth slowed substantially and we saw channel destocking ahead of the inject conversion.
Okay. Then Tom, it sounded like when we met in Chicago last weekend, or whatever it was, two weekends ago, that you guys were excited obviously about inject, that one of the things that seemed like it came out was the notion that clinicians may be seeing better IOP reduction than what was seen in the clinical trial. Can you just talk to why that may be the case? I recall that as we saw iStent play out, we saw better results in the real world over time. Can you just talk about what specifically you've been hearing on that and the importance of that? Thanks.
I'd be happy to. I think what we're seeing with iStent inject mirrors what we saw with iStent. In the pivotal trial in iStent and subsequent to that, we saw progressively more marked reductions in intraocular pressure as surgeons became more facile with the procedure, understanding placement within the trabecular meshwork, understanding how close or far apart to place the stents, two areas where they felt they were getting a full flow into the episcleral venous system. Likewise, I think we're seeing the same thing here. We're seeing surgeons that even though this is a very facile, elegant procedure, there are nuances that can be adapted as they incorporate new pearls, which allow them to get even greater pressure reductions.
As I think all of you are doing your channel checks, I think you're hearing the same things we're hearing, which are surprisingly strong and robust reductions in intraocular pressure that appear to be better than what we saw in the U.S. pivotal trial. I think it's all seasoning and I think incorporation and facility and use of the procedure over time.
Your next question comes from the line of Robbie Marcus from JPMorgan. Your line is open. Please go ahead.
Great, and congrats on the good quarter.
Thanks, Robbie.
I was hoping you guys can help us understand the current dynamics in the market. Now with CyPass off, help us understand how doctors are thinking about MIGS. Before I had always had the understanding that it was a toolbox approach. We use some for certain patients, some for other patients. I always had the understanding that doctors wanted to use MIGS because there aren't a whole lot of other options for these patients. I understand not every patient is going to go from that you lost in CyPass or that they lost in CyPass sales to iStent. Help us understand what you're hearing from physicians around the decision making of patients that maybe would've formerly had CyPass and how they're getting treated today.
I'll ask Chris to respond, and I may add some color.
Hey, Robbie. As time went on, the CyPass device, and not in all cases, but tended to move to more moderate to advanced glaucoma. That was, as we've always said, had a lot to do with the risk-benefit calculus associated with that product. Those devices that are now off the market, I think some doctors are looking at iStent inject, but they're also looking at the all other bucket. The all other bucket, as we describe it, is primarily utilized by glaucoma specialists who are treating most of these moderate to advanced glaucoma patients. That's the OMNI, the different canalicular devices, et cetera. That's where most of the glaucoma specialists are going. With the cataract comprehensive guys, they're certainly looking at us. We would expect that they would look at the other competition as well. That's where it is right now.
I think it was obviously beneficial for us in terms of the timing of our introduction of iStent inject.
Yeah, I would just add that as we've said all along, we felt, and we've said that with the CyPass as well, that we thought that glaucoma specialists would be more attracted to the use of a suprachoroidal stent because they have a higher degree of tolerance for some of the collateral and sequelae that can be associated with the product. Because a lot of times they're digging deep and trying to get as profound pressure reductions as possible. Even though the means of a suprachoroidal stent and trabecular bypass stents tend to be similar in clinical trials, because of the episcleral venous back pressure associated with trabecular bypass stents, you're not going to see pressures typically in the six to eight millimeter range.
This is where glaucoma specialists are trying to reach for certain candidates, so they don't have to move to a trabeculectomy or to an aqueous shunt procedure. This is the niche area that we think that suprachoroidal stents largely define. We've said this now since we've gone public. Because of that niche, we think this is why there's not going to be typically a one-to-one conversion. Because as you know, as powerful as our trabecular bypass stents are, they're not going to invariably reach down to the six to eight millimeter target range that you need with some of these very progressive patients. Now, what that portends, though, is the need for when we have a suprachoroidal stent, we may have the opportunity to fill that niche. We remain optimistic about the algorithm. We've been very consistent about the placement.
By the way, this has played out, I think very similar to what we've said in the marketplace since our IPO. We expect that we'll have the full treatment algorithm in future to treat all disease stage severities.
Ravi, from a market modeling perspective, when we've quoted and talked about 20% growth, we've never included those late-stage procedures such as tubes or trabs or even a XEN type procedure in those estimates.
Okay, great. That's helpful. Maybe a follow-up, Joe or Chris. The spending in the quarter was a bit higher than I had expected. Maybe help us understand as you're launching inject, as you're converting the market, help us understand what sort of selling and marketing activities are going on, and maybe if you could give us any thoughts on the trend line into 2019, that would be really helpful. Thanks.
Hey, Ravi. I'll start out at a high level on the sales and marketing. With a product like this, we made significant investments into the promotion of this product. We had some robust marketing activities at the AAO. We've had some activities associated with advertising, then certainly the training of the sales organization, all of which were moved up, if you will, because of the early approval of iStent inject.
It's Joe. I would just add, in addition, there's obviously all the promotional activities in terms of the training activities and the products used in training and things like that are incremental costs associated with the launch. On the R&D side, largely as expected, right? As we continue to pick up steam in the iDose trial in particular, you're going to see that R&D and clinical spend continue to accelerate going forward and into the 2019 timeframe. Some expenditures in the quarter that were a little bit more one-time in nature, but generally, as you heard Tom say, we're continuing to prudently invest and reinvest in the business for the long-term future, both commercially as well as from an R&D perspective.
Thanks a lot.
Your next question comes from the line of Bob Hopkins with Bank of America. Your line is open. Please go ahead.
Thanks, and good afternoon.
Bob.
Joe, if okay, I wanted to start with you. You made a few comments around things to consider for 2019, and I appreciate those comments, but there's a lot of moving parts to 2019, and I'm not 100% sure of the net take-home around your comments beyond it's not going to be a perfectly clean year. My initial take when I put all these comments that you've made together is that the consensus of $231 million probably is a little too aggressive given some of the things that you said. I'm not really sure of that, and I just wanted to ask preliminarily, am I reading your comments correctly?
Well, I appreciate the question, Bob. I think obviously we're not going to give guidance sitting here on this call or endorse specifically where the street is at beyond trying to give some incremental color. I think it's a unique situation heading into this call, obviously, with what transpired during the quarter. Folks had to put together a pretty significant change in their models both for the remainder of this year and going into next. Hopefully, the guidance that we're giving for 2018 is an important data point to level setting expectations around where the business is headed. Then we try to give some incremental color around those growth drivers heading into next year.
Make no mistake, I think what you're hearing from Tom, Chris, myself is optimism with respect to the market development and what's happening fundamentally underneath it, iStent inject being an important driver of that for us. We're ahead of schedule on that. We feel very good about what that means as we head into 2019. My comments were designed to help you get a bit more granular as you think about what that translates into quarter in and quarter out of the course of 2019. Once you've already level set based upon the guidance we've given in 2018.
Yeah, no, I appreciate that. I hear the optimism. I think there's a clear reason to be optimistic. There's just some things that'll impact, like channel stocking. We can't model channel stocking, doctor conversions. These are some things that are just very challenging as outsiders to model. I was just trying to get some sort of quantification of those kind of temporary headwinds, if you will, or just trying to make sure I understood what the message is given the uniqueness of the situation we're in right now.
No, I certainly understand that. I think, if you think about it even from the perspective of communicating at another level of granularity, within these accounts, you have multiple doctors within an account. If one was a CyPass user, two were being trained on iStent inject, there's some destocking activity. There's enough moving parts there that it becomes pretty difficult to quantify in a way to break down each individual component for you to model that. What I can say, I guess, to sort of put a finer point on a couple of them, we are saying going into 2019, just to be clear, that we think the channel destocking should be largely behind us, right?
Okay.
If you think about it from a doctor conversion standpoint, what I said was that we expected to enter 2019 with more or at least half of our doctors in the training funnel. You get past that halfway mark, then you sort of offset each other between restocking of customers who are now on iStent inject versus destocking of the ones that are still being trained, and it becomes a net neutral as you enter into 2019. I think you can also take from that data point around where we'll be at from a training standpoint, kind of the pace in which we're converting existing iStent users to iStent inject, and that should help you as you think about the cadence of what that means for the business into 2019.
Really the last thing that I tried to highlight was I don't want to it loss, which is as we've had a pretty substantial, and as we've forecasted a pretty substantial slowing of new doctor training, that's not just a second half of 2018. There will be some lag effect associated with that as we start the market or the year off in 2019 from a market growth perspective.
Okay. That's super helpful. I appreciate it. Lastly, just quickly, and I completely hear what you guys are saying in terms of Alcon not being one for one. That makes total sense. I'm still curious, what is your best estimate as to what the Alcon run rate was with CyPass at the time of the recall?
Well, Bob, it's Joe. I think we have a pretty good sense of what that run rate was. We're somewhat prohibited from getting too granular given confidentiality obligations and the like. Maybe the one comment I'll say is I think when I look back at some of the modeling that was done across the buy-side models for 2017 and even in 2018, I think folks were a little bit ahead of the true run rate of CyPass during that time frame. Beyond that, I can't get much more granular.
Okay, great. Thanks very much. That's all I've got.
Thanks, Bob.
Again, if you would like to ask a question, please press star followed by the number 1 on your telephone keypad. Your next question comes from the line of Matthew O'Brien with Piper Jaffray. Your line is open. Please go ahead.
Good afternoon. Thanks for taking the questions. Just as a starter, and I know it's early days here, but can you just give us any kind of sense for the utilization in your inject accounts here in the U.S.? Is it higher than what you were saying with iStent alone?
It's Joe. I think you sort of set it up the right way, Matt. It's a little bit early for us to probably be commenting on that. I think we've all been on record that the product itself and in the surgeon's hands, they like using it, right? I think that sets up well for expanded utilization as we make our way into 2019. I think it's just too early to be seeing those trends develop now.
Anything you can provide qualitatively as far as introductions in Europe or U.S. countries?
Yeah, as we said in the past, Matt, we've been very pleased with what's happened in Australia and Canada and Germany and now the U.K. with iStent inject. I would say that we've had similar feelings here about the U.S. The reception for iStent inject has been very positive. I couldn't be more pleased with the execution and the rollout strategies of this campaign. Doctors are enthusiastic about the product. They're pleased with their outcomes. As we've spoken before, they're pleased with the predictability of it, the elegance of the procedure, the ease of use, and certainly the outcome. Things are going very well.
Our challenge, Matt, on trying to extrapolate from the OUS experience is just the N is so small outside the U.S. If you were doing $1 million of sales in a country and you launch inject and you do $2 million, I don't think that's in a trend that you can extrapolate directly to the United States given we're just at a different stage of market development.
Yep, that's fair. As my follow-up, as I look at the Q4 guide here, it's up easy math, about $6 million sequentially. This time last year, you're up about $1 million. I know there's some destocking in there, so that's a little bit of a headwind, but that bump there, and I get, again, international is doing well, but that bump feels like it's largely attributable to the CyPass coming off the market. Is that a fair way of viewing kind of the impact there?
Again, not getting the full impact of CyPass being off the market in Q4, but some level of contribution, I'm sure you're not going to quantify it for us here, but just some way of kind of looking at that bump that we're seeing here as maybe 50%-60% of the CyPass utilization in the U.S., and we can kind of use that as a baseline to start thinking a little bit more about 2019.
Yeah. Well, I think, Matt, first, the guidance increase is about $12 million from midpoint to midpoint, and international accounts for about $2 of that, U.S. accounts for about $10 million. I think all I can say with respect to the, I think the heart of your question is, it really is a combination of continued, what I'll call organic outperformance, i.e., without the benefit of the recall activities. An evaluation of all the Q4 scenarios, and there's a lot, as others have alluded to in this call, a lot of puts and takes that we're evaluating with respect to the remainder of the year. It's both that outperformance that we've seen and we continue to see, as well as incorporating scenarios around a lot of factors, including the pickup from the CyPass recall.
Fair enough. Thank you.
Your next question comes from the line of Jonathan Block with Stifel. Your line is open. Please go ahead.
Great. Thanks. I'm going to ask probably too straightforward of a question, but just curious. CyPass has been off the market for roughly two months and change, and you guys are obviously interfacing with many more docs than we are on our end. Tom or Chris, just a blanket statement. If there were 100 CyPasses being done in the market by a doc, can you give us, we all understand it's not a one for one, but is it a 0.5 to one, a 0.2, a 0.7? Maybe if you can just give a little bit more detail on how you think and where those procedures are going. Then I've got one or two follow-ups.
Well, it's Joe. Tom or Chris can comment qualitatively on what we're seeing and hearing from the marketplace, but quantitatively, I don't think we can get more granular than it's not one-to-one. I think you have conversations in the community. There's a wide variety of that depending upon the type of doctor that you're talking to. A glaucoma specialist who's seeing a lot of late-stage patients that might have been using CyPass, to Chris' earlier commentary, might be shifting a decent chunk of those to tubes and trabs or XEN and procedures like that. For the comprehensive doctor who's seeing more of that moderate patient they might have been using CyPass on, I think we're picking up a pretty good chunk of that. How all that translates over time, we're just not going to get more granular than it's not one-to-one.
Okay. Let me try maybe a different approach. Joe, I guess I'll stick with you then. I believe mid to high teens year-over-year growth seems implied in your U.S. number for the fourth quarter of 2018. That's with CyPass off the market for the entire quarter. Should we think about that's sort of the baseline and that's likely suppressed by the channel that you mentioned and that unwinds in 2019? Please let me know if that makes some sense. In other words, again, you've got the high teens implied in the U.S., but that high teens is being suppressed by the elements of the channel, which should unwind next year. Then I've got one last one for you.
I think that's a good question, John. If you think about unpacking it as it turns towards 2019, obviously within a margin of error, because there are a fair number of puts and takes in that and things that will be evolving going into next year. That's not a bad way of thinking about the trend heading into 2019.
Okay. That's my goal. Not a bad way. Last one for you, Chris. Chris, just thoughts on new docs being trained, moving parts. I'm guessing iStent inject has them excited. You've got better pressure drops and easier procedure to perform. Are you hearing any concerns or any offset to that in regards to ECL and safety when you reach out and you hear back from the next wave of potential adopters? Thanks for your time, guys.
Sure. First, just to remind you, John, that we're focused completely right now on converting our existing customers over to iStent inject. People that have been using iStent, whether they used it exclusively or in combination with other products, these are the guys we're focusing on. Those that are on the sideline with MIGS will be coming along after we get through that training of our existing docs, which, as Joe mentioned, will be sometime during the course of 2019. Yeah, there's people very interested in iStent inject. I do think it's a product that will help to expand the marketplace, and we will get to those people in due time.
Again, if you would like to ask a question, please press star, followed by the number one on your telephone keypad. Your next question comes from the line of Joanne Wuensch. Your line is open. Please go ahead.
Good afternoon. Thank you very much for taking the question. I have some product pipeline questions. Your commentary on the suprachoroidal stent is interesting because in our doctor due diligence, one of the things that seemed to be the "CyPass problem" was the where in the eye it was placed. If that is the right information or your view too, how do you compare that to continuing down the road with the suprachoroidal stent of your own and not just sort of redirect those funds and those efforts elsewhere?
Yeah, good question, Joanne. This is Tom. I'm happy to take this one. What I would tell you is that, as we've said for some time now, since this issue came up and the voluntary withdrawal from Alcon took place, the anatomy in that angle certainly is one of the conditions that we think leads to the endothelial cell loss. By Alcon's own admission, they found a tight correlation between the number of retention arches that were visible, that were actually, in a way, proud of the ciliary muscle attachment. They have a high correlation with endothelial cell loss. It makes sense because the more retention arches that show, that means that the suprachoroidal stent is higher in the anterior chamber, and then it predisposed to touch the endothelial cells of the cornea.
They have actually a proportional analysis showing the number of retention arches that show and the correlation with endothelial cell loss, and this can be either due to improper placement or potentially due to some migration over time. These are really powerful issues that really have led to the endothelial cell loss. When you look at what we have with our suprachoroidal stent, we will determine and look at the data when it's available. Last patient should be at the end of the first quarter next year. There are some really seminal differences between our product and theirs. Our product is far shorter. The product is only four millimeters in length versus 6.3, so less than 50% the length, but actually less than 50% the inner diameter and outer diameter. It's a far more microinvasive device.
Secondly, our device has a radius of curvature, which follows the natural scleral entry path into that potential space, which may have some ability to then curve it away from the endothelium and the kind of perpendicular nature of more of a straight shunt that you've seen with the Alcon device. Again, the data will be telling.
We think there are other differences as well. We don't have fenestration holes in our suprachoroidal stent, which we think offer an ability for cells to migrate and basically become an obstructive mechanism within the stent. Our stents are coated with heparin. All of these, which we think give us the ability to perhaps provide for sustained therapy and maybe give us some appositional types of changes which may alleviate some of the risk of endothelial cell loss. It's a long-winded answer. I think it answers your question. The data will be telling. We're optimistic. We know that there's an appetite for this kind of a product, you know it as well, with the glaucoma community, rather than having to go to an aqueous shunt or to a trabeculectomy.
We think that we want to continue on course and try to fill this niche in the future.
Thank you. As my second question, I want to go back to your commentary regarding Inject and the rollout of it. My impression from talking with physicians is one of the things that they like Inject is that it's easier to use, and at some stage, we have theorized that the doctor sitting on the sidelines with easier to use product will now get into sort of the MIGS program. How do you think about going to them in the wake of CyPass with reimbursement somewhat better in certain situations, somewhat not so much, and asking them to say, "Okay, I know, Dr. Jones, you haven't been using a MIGS device. Now start to use Inject." How do you approach that physician throughout 2019 and ramp on the new doctor? Thank you.
Joanne, this is Chris. Really we focus on the safety message here. Trabecular bypass is definitely safer, has less sequelae associated with it than a suprachoroidal shunt, we sell the benefits and features of that, the safety profile, and then of course the efficacy that you get from having two patent bypasses. That message is resonating. I think it's being well accepted. I think to your point, the ease of use also plays into that. With those three things in mind, I do think that this is a product that people who have been sitting on the sidelines or who are unhappy with the voluntary recall of the CyPass device will be energized when they get this in their hands.
Joanne, I wanted to use this as an opportunity to, I think, completely retire an issue. The issue is one of whether the endothelial cell loss associated with suprachoroidal has any class correlation or does it affect other MIGS devices. I'm really terribly delighted, as many of you know, to talk about the FDA's recent pronouncement that there is no evidence to date that this is a class issue, that there is any endothelial cell loss associated with other MIGS devices, primarily our trabecular bypass devices. I use this again as an opportunity to say in the trabecular bypass space, we've been commercialized over 10 years. We have over 400,000 implants commercially that have been sold, many others in clinical trials.
We studied for over six and a half years adverse events in the U.S. pivotal trial in the first with the classic stent, and we found no statistical difference in SAEs between iStent and iStent plus cataract versus cataract surgery alone. Again, I wanted to reassure and hopefully retire the issue completely that there is any correlation of endothelial cell loss with the trabecular bypass space and particularly with our iStent products.
Thank you.
We have no further questions at this time. I'll turn the call back to our presenters.
Okay. Well, listen, I want to thank all of you for your time and attention today and to our investors for your continued support and interest in Glaukos. Thank you and goodbye.
This does conclude today's conference. You may now disconnect. Have a great day.